John O’Neill, head of business development at BettingJobs.com, highlights the benefits of US Sportsbooks using automation to streamline trading teams
For those operators looking to capitalize on the opportunities presented by the repeal of PASPA, developing a trading strategy tailored towards the unique demands of the US market must be a priority.
Sportsbook trading has evolved considerably over the past two decades. Operators can now draw upon a range of third-party tools that enable them to automate much of the process.
But at the same time, there is still a need for the human touch. Finding the right blend between the artistry of experienced trading experts and the automation of the latest third-party tools is the recipe for success.
Trading places: assembling a team of world-class traders
Traditional trading teams do not come cheap. According to the BettingJobs.com Salary Survey, a director of trading in the UK will set an operator back an average of $150,000 per year.
However, this is just the head of a team that requires a range of specialists to fully function. Operators will also need to appoint a risk manager to profile the customer base and control liability (average salary: $74,000); a quantitative analyst to optimize trading models ($79,000); and traders of differing seniority ($30,000 – $70,000 depending on experience).
Another challenge will be the recruitment process. With a lack of sports betting heritage, the US will be short of experience in the trading field.
While junior roles can be trained in-house, operators may need to look further afield to recruit senior positions. Lean on resources such as Findmyexpert.com to help locate the best talent available.
Rise of the machines: which trading functions can be automated?
Fortunately for operators, particularly new entrants, the cost and difficulties of assembling a trading team can be reduced by automating much of the heavy lifting and operating a streamlined group of experts to oversee operations.
Third party products now make it possible to operate a comprehensive and competitive sportsbook which is run by just a handful of talented employees.
Operators have a choice of products depending on how much of the trading process they wish to be automated.
A number of fully-managed trading solutions that cover pricing and risk management are now available, or operators can instead choose to supplement their trading team with data or pricing feeds that can be integrated into an existing sportsbook product.
Most successful operators – even those with large trading teams – tend to now take a variety of these data and pricing feeds.
It allows their trading teams to quickly determine their position in the market while automating less important functions that can nonetheless become very time consuming.
For instance, modern sportsbook operators now offer hundreds of markets on thousands of events on a daily basis. Many of these events will only attract limited betting volumes, so it makes sense for your team to automate as much of the process as possible and focus attention on high-demand markets.
One word of caution: it is still important to have human oversight on these markets, lest a savvy punter finds a way to take advantage of automation and leave the operator with a heavy loss.
Automated approach: the benefits and costs of outsourcing
Aside from the clear benefit on cost from automating part of a trading function, operators should also enjoy greater speed and an ability to trade a larger number of events.
Technological automation has been a key driver in the expansion of sportsbook offerings in recent years, but the increased number of events and markets do still require a sizeable workforce to run.
Automating significant sections of trading does also have drawbacks, primarily a loss of control over product offering, with operators reliant on the feeds provided by third parties. With other operators using the same feeds, differentiation can become a challenge.
In Europe, those who see sportsbook as their core offering usually automate less than those who operate a complementary sports betting product alongside an online casino.
Perfect balance: the future of the trading floor
There is no question that the art of trading is losing ground to the science of automation, but human expertise will always have an important role to play.
Whatever the structure of the sportsbook operation, there is a requirement for strong sportsbook professionals to efficiently run the product.
Even for those opting for a fully-managed solution, operators need their own people overseeing the product to ensure mistakes are not being made.
Similarly, when targeting a specific market or demographic, automated feeds rarely offer the degree of customization required to make an impact. As the US opens, we would expect to see those who offer the strongest products to build upon the US-facing feeds currently available.
Finding the balance between man and machine is the only way to ensure a trading function that meets everyone’s requirements.